MENADŽERSKA POHLEPA – KRAJ EPOHE KORPORATIVNOG KAPITALIZMA
MANAGERIAL GREED – THE END OF THE ERA OF CORPORATE CAPITALISM

Author(s): Milan Lakićević, Saša Vujošević
Subject(s): Business Economy / Management, Governance, Management and complex organizations, Economic development, Socio-Economic Research
Published by: Finrar d.o.o Banja Luka
Keywords: managerial compensation; agency problem; modern corporation; social responsibility; and sustainable development;
Summary/Abstract: Corporate governance launched the so-called modern corporation as a central institution of the market economy, and its most important characteristic is the separation of the function of ownership from management. The management function in a modern corporation is taken over by professional management who, in the capacity of an agent, manages the corporation's assets on behalf and for the account of the owner - the principal. One of the biggest problems of modern corporate capitalism is the tendency towards the concentration of management power, whereby the control and supervisory mechanisms of the owners become only formal instruments whose effectiveness and timeliness are highly debatable. For management and leadership processes of the corporation, managers receive a managerial fee that represents a certain direct or indirect financial benefit. The amount of management compensation often does not correspond to the achieved results of the corporation, nor is the principle of equivalence set as a basic prerequisite for the legal validity of management contracts. In the era of corporate capitalism, the desire of management and owners to acquire as much wealth as possible, threatens the existing order of socio-economic relations in the long term, creating an ever-widening gap between the enormously rich and poor population. Managerial greed is increasingly becoming the dominant determinant of the crisis of corporate capitalism. The long-term orientation of corporations towards social responsibility and sustainable development implies finding adequate reward and control mechanisms.

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